BetaWorks Raises Around $2M for Bit.ly, Spins It Out

If you’re an active Twitter user, then you’re already familiar with Bit.ly, a web service that not only allows you to shorten URLs to meet the 140-character limit of the Twitter system, but offers up analytics, such as how many people clicked on the link and also talked about it somewhere on the web. Use of the service has been growing like wild mushrooms after a heavy downpour. Last week alone, 20 million folks clicked on Bit.ly-shortened URLs (though TinyURL is still the biggest URL shortener on the web).

That popularity has helped Bit.ly’s creator, New York-based incubator Betaworks, to raise close to $2 million in Series A funding from O’Reilly Alpha Tech Ventures, Jeff Clavier, Mitch Kapor and Howard Lindzon to spin it out into an independent company. Bit.ly will use the new funding to compete with a growing number of rivals, including StumbleUpon and Digg.

Please Re-read: $2 million “in Series A funding” they are JUST getting a series of funding, they are not getting $2 mil all at once for Just a re-direct service – they must have a pretty cool plan behind it all – I know I am a ly.bit jealous personally because I also have a very good plan behind my own tiny – small – bity lil url shortner service myself ;o)

There is no possibility of a revenue stream. Think about it… the vast majority of people using the service will be just a pipeline to the destination. They’ll never land on a bitly property (unless they traffic trade).

Their market will be people like me who use their API to automatically generate links that we post on Twitter.

This has nothing to do with revenue, merely setting it up for sale to someone who wants to get a redirect service… and why would someone buy a redirect service, when any competent programmer could build one in a weekend? Even with analytics?

The person buying this service would have to be really INCOMPETENT, have no knowledge of the internet nor programming and no idea that one of their long suffering programmers on staff could build something similar in short order.

Lets say they have a million people using the service, then since 99% of those never touch a bitly property, whats the point? Its just an expense with the traffic. Are people like me gonna go there like every day to check on stats and click on any ads? No. Are they gonna be able to charge for the service? No (see free competition).

Don’t get me wrong, I’m not jealous or anything, but this strikes me as not making a whit of sense, and my opinion of Om just dropped a notch since he’s uncritically writing up this bucket of spit.

$ 2 Million for a URL-shortening service + Analytics + bells and whistles is a huge figure no matter which way you look at it. I just hope they can get some money out of this. I totally doubt twitter will buy them. There are quite a few services, each good.